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Role of Institutional Investors: Evidence from the Foreign Rule-144A Debt Market

Author

Listed:
  • Alan G. Huang

    (School of Accounting & Finance, University of Waterloo, Canada)

  • Madhu Kalimipalli

    (School of Business & Economics, Wilfrid Laurier University, Canada)

  • Subhankar Nayak

    (School of Business & Economics, Wilfrid Laurier University, Canada)

  • Latha Ramchand

    (University of Missouri, Columbia, MO 65211, USA)

Abstract

We examine the unique role played by institutional investors in the private corporate debt market for Rule 144A debt. We use the recent global financial crisis as a quasi-natural experiment to study how qualified institutional buyers (QIBs) facilitated funding to the foreign debt issuers in U.S. Using an exhaustive sample of foreign bond issuances in the U.S. from over 65 countries between 1990 and 2013, we examine (a) corporate decisions involving debt choice and market timing, and (b) determination of offer spreads. Our findings collectively support the notion that QIBs enabled funding in the foreign 144A debt market despite the financial crisis.

Suggested Citation

  • Alan G. Huang & Madhu Kalimipalli & Subhankar Nayak & Latha Ramchand, 2021. "Role of Institutional Investors: Evidence from the Foreign Rule-144A Debt Market," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 11(03), pages 1-51, September.
    • Handle: RePEc:wsi:qjfxxx:v:11:y:2021:i:03:n:s2010139221500117
    DOI: 10.1142/S2010139221500117
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